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Banking Bill

My Lords, I am sorry to disappoint the noble and learned Lord, Lord Lyell, as I am replying to this amendment. He will know that I speak with the inherent wisdom of my noble friend Lord Myners. My noble friend has cast his decisive eye over the way in which we handle these issues, so the noble and learned Lord can rest assured that the Government are bending their best efforts to defend our position and that we appreciate the criticisms of the clause and the strength of the amendments that have been tabled. I am very grateful to the noble Lord, Lord Blackwell, for bringing his innovatory dimension to all this. He will know that I can scarcely respond to it off the cuff at the Dispatch Box. I am not sure that it is feasible to follow the line that he suggests, but I am grateful to him for having advanced further the burden of the remarks made by my noble friend Lord Barnett, who, although critical of the clause, asked us to concentrate on its context and the nature of the problems that we are trying to resolve. I am grateful to the noble Lord, Lord Blackwell, for identifying just how the problems could emerge. I am not sure that his solution is just constitutionally innovatory—it is probably quite impossible—but I will take his point on board and consider it seriously. On Amendment 54, I congratulate the noble Lord, Lord Howard, on the force of his argument today and last week in Committee. He has been persistent on these issues but he has also been careful about how he has presented his arguments. I am grateful for that. I hope that, in response to this significant challenge from the noble Lord, Lord Howard, the House will, as the debate progresses today and, if necessary, at Third Reading, begin to find that the Government’s position and that of the noble Lord are gradually converging and that there is not a vast gulf between us on these issues. I will, nevertheless, identify why I defend the Government’s position. I begin with a note of caution. The Government believe that this clause is, as a whole, essential. The Constitution Committee, in its report published last week, stated: "““We accept that there is force in the Government’s general explanation of the need for the Treasury to have a power to change the law by order””." I will come to the remarks of the noble Lord, Lord Goodlad, in a moment, when I consider his amendment. I must also note that the Constitution Committee raised important questions about the exercise of power in the public interest, to which I will turn when I consider the amendments. Distinguished members of that committee have already made their representations today. The Government are grateful for the committee’s balanced and serious analysis of this clause, because we all recognise its importance. The Delegated Powers and Regulatory Reform Committee made no specific recommendation in relation to Clause 75, but certainly urged that the House should scrutinise it closely, "““so that it might satisfy itself that the rather unusual context for which Part 1 of this Bill makes provision justifies the extremely wide power taken by the clause””." The House has certainly scrutinised it carefully. The noble Lord, Lord Goodhart, who takes great responsibility for that committee, will know how intensive our debates on this were in Committee. He will also appreciate the strength of the representations that have been made today. I realise that there are still areas where the Government need to clarify and explain their position, which is what I hope to do during these debates, particularly on this group of amendments and the next. I apologise in advance for the rather lengthy response that I am obliged to make. This being Report, it is my only shot at convincing the House on these important issues. I have a number of important points to make about the amendments. Three crucial issues have been raised. First, there is parliamentary procedure. Parliament must be allowed to play its essential role in holding the Executive to account. We have introduced an amendment that strengthens this in respect of Clause 75. We shall come to this when we discuss the next group of amendments. I will not go through that argument in full now, but it will be recognised that the Government appreciate the importance of government accountability. Secondly, the potential to use the power with retrospective effect would be removed by Amendment 54. As the Constitution Committee has noted, retrospective powers are not unprecedented, but the Government must make a watertight case for why they are needed in this case. I will come to those points in a moment. Thirdly, there is the question of clarity around how the power will be used. This is a broad power. Noble Lords, including the noble Lord, Lord Howard, have rightly sought assurances that this will not be a power exercised on the whim of a Government. I will provide reassurance about the seriousness with which any Government would use such a power. We studied the issues carefully. We are aware of the strength of opinion in the House. I hope that it will emerge from our debates today and at Third Reading, should that prove necessary, that the power is more tightly worded and will be fully explained. I must make the position clear. The one thing that the Government cannot do is amend Clause 75 to such an extent that the power becomes unusable; to do so would jeopardise the prospects for a successful bank resolution and thus, in the Government’s view, would be irresponsible. I come again to the point that we must not forget: we are discussing this power in relation to the context in which it would be deployed and the nature of the problem for which it would be used to resolve. As the noble Lord, Lord Newby, noted in his remarks in Committee: "““Having read the Treasury memorandum, it is very difficult to see how the operation of the Bill could take place without such a clause””." That, of course, is the nub of the Government’s case. The noble Lord went on to say: "““Therefore, although we on these Benches have a general aversion to any retrospective powers, without this power and the whole clause, it would be very difficult, if not impossible, to effect the rest of the powers in the Bill””.—[Official Report, 20/1/09; col. 1595.]" I think that Members on all Benches will agree that they may be necessary. That sums up the position that I sought to deploy at some length in Committee; indeed, it does so more accurately and succinctly than I succeeded in doing. I thanked the noble Lord for his contribution on that occasion, and I do so again today. However, I am going to ruin the effect of that succinct analysis by going on at some length, but that is the nature of the obligation of speaking from this Dispatch Box. Amendment 54 would remove Clause 75(3), the provision that provides for retrospective effect. The noble Lord, Lord Howard, has spoken with conviction about the need to remove this subsection, while the Constitution Committee noted the power with a great deal of interest. Its report is balanced and recognises the challenges posed by this kind of power. The committee notes that there is no absolute prohibition on retrospective legislation in British constitutional law or practice. It also notes that retrospective powers are unusual but not unprecedented; in presenting the amendment, the noble Lord, Lord Goodlad, also reflected that position. My last attempt to try to provide the House with examples of legislation with retrospective elements did not produce quite the convinced response that I would have liked, and noble Lords indicated that I ought to do better. This is a difficult area and none of the examples that I am about to give will be directly comparable, because we are dealing with different pieces of legislation and therefore very different contexts. I insist that context is everything with regard to these powers. However, all the examples demonstrate that such powers can and have been justified in terms of their context and all of them have been agreed in Parliament. A recent example is found in the Criminal Evidence (Witness Anonymity) Act 2008, which overturned the effects of a judgment of the House of Lords on the scope to grant witness anonymity orders in criminal proceedings. The Act was given a qualified form of retrospective effect in that it could, in certain circumstances, apply to witnesses who had given evidence before the Act came into force. This was controversial, but the case was successfully made that the powers were justified in the public interest. There are of course differences between the power under that Act and what will be provided under Clause 75 of the Bill. I do not have the slightest doubt that the noble Lord, Lord Howard, will point that out with some force when he comes to speak, but before he gets the chance to do so I should say that I acknowledge the differences. I am giving an example of legislation that has retrospective effect. A second example is Sections 3 and 4 of the National Insurance Contributions Act 2006, which contain regulation-making powers enabling retrospective provision to be made. A third example is in Section 431A of the Income and Corporation Taxes Act 1988. The regulation powers in that section enable provisions to have retrospective effect and may amend primary legislation. However, I accept the fact that the noble Lord, Lord Howard, is loath for me to comment on anything to do with taxation in this respect, so the third example is put forward with some diffidence.